Indonesia Auto Finance Market Outlook to 2026

Market Overview:

The Indonesia Auto Finance Market has been defined as the total credit disbursement by banks/NBFCs and Captive finance companies towards the financing of used & new cars. However, in 2020 market received huge setbacks owing to the global pandemic of COVID-19 as the market witnessed a negative growth rate. The Indonesia Auto Finance market was reduced in 2020. Although, in 2021 the market recovered significantly and registered a growth rate of ~48% and reached a market size of USD 14.7 Bn.

Revision of down payment rates, expanding urban population, low-interest rates, and Customized loan schemes are some of the growth drivers of the Indonesia Auto Finance market.  The government of Indonesia and financial regulatory authority have lowered the down payment rates (from 15-30% to 0-20%) and the interest rates to make financing a viable option for everyone who is considering purchasing an automobile.

The Indonesia Auto Finance market ecosystem is highly fragmented as the market is controlled by a few market leaders including Bankmega, Danamon, BNI, Mandiri, CIMB NIAGA, Bank Mestika, and Bank Jasa Jakarta. The Indonesia Auto Finance industry ecosystem is huge as it comprises NBFCs, Captives, Dealerships, and Online Auto-classifieds companies.

Indonesia Auto Finance Market Analysis

• In Indonesia, most of the main banks offer every type of loan, including trade finance, vehicle, MSE, business, and refinancing loans.
• While captive NBFCs like Toyota Astra and Suzuki Finance are limited to their OEM brands, finance institutions such as BCA FSinance, Mandiri Finance, etc., offer financing to all of the major OEM brands.
• The Indonesian Financial Authority (OJK) has lately permitted banks and Mult finance businesses with non-performing loans (NPLs) of less than 1% to have reduced down payment rates (between 0 and 10%).
• Since SMEs accounted for almost 60% of Indonesia's GDP in 2021, credit lending businesses have reduced their interest rates to improve their clients' ability to take out loans. This move has also been aided by government initiatives to increase financial support for SMEs.
• In Indonesia, a salesman and customer must frequently complete an extensive amount of documentation in order to submit an application for a car loan.

Key Trends by Market Segment:

By Ownership of Vehicle: In Indonesia, almost 57% of new automobiles have financing, compared to about 43% of used cars, even though there are more than twice as many used cars as new ones. In 2021, a total of 2.5 Mn vehicles were sold in the Indonesia auto finance market out of which 0.7 Mn are new vehicles and 1.7 Mn are used vehicles. In 2021, a total of 1.7 Mn used vehicles were sold in the industry out of which 0.3 Mn are 4W Commercial & more and ~1.4 Mn are Passenger Vehicles. Additionally, out of ~0.7 Mn new vehicles in 202, 0.1 Mn were 4W Commercial & more and ~0.6 Mn were Passenger Vehicles.

By Type of Lenders: Banks currently issue more than half of auto finance loans, primarily due to their high credibility and lower interest rates. In 2021, Banks approved 53% of the total credit disbursed followed by non-captive NBFCs, and Captive NBFCs which rule 26% and 21% of the market respectively. Bank rates can range ~4% per annum. Some banks may offer an interest rate of ~6%, but this is usually for used cars. Loan tenure is  1 – 5 years and also have the option available for early loan repayment by paying early repayment fee.

By Geographical Locations: West Java and Jakarta are the leading areas in Indonesia auto finance market with a market share of 35% and a combined value of USD 5.3 Bn. Other regions such as Jawa Tengah, hold approximately 8.4% of the market share, with Jawa Timur (9.5%), Sumatera Utara (4.1%), and other regions accounting for 42.1%. All the automobile manufacturers in Indonesia (including passenger car manufacturers and commercial truck manufacturers) are a member of the non-governmental Association of Indonesia Automotive Industries​. In the passenger vehicle (PV) segment, the largest contribution is from segments with products priced at USD 16,138 and below, which were mainly the 4X2 and LCGC segments.

Competitive Landscape:

Major Players in Indonesia Auto Finance Market

• The Indonesian auto finance market is moderately fragmented, with the top 8 players holding more than 50% of the market share.
• BCA Finance is the leading auto finance provider in Indonesia with a market share of 11.1% followed by Mandiri (8.9%), Astra Financial (7.5%), CIMB NIAGA (7.4%), Astra Finance (5.9%), and BFI Finance (4.9%).
• Approximately 42% of the market is highly fragmented as it involves several small-size companies present in the country.
• While captive NBFCs like Toyota Astra and Suzuki Finance are limited to their OEM brands, finance institutions such as BCA FSinance, Mandiri Finance, etc., offer financing to all of the major OEM brands.

Future Outlook:

• The Indonesia Auto Finance market witnessed substantial growth from USD 19.219 Bn in 2022 to USD 36.838 Bn in 2022. The market reported a CAGR of 2% during the forecast period of 2022-2026.
• Increasing Population, growing income levels and recovery of the economy post Covid is leading to a rise in sales of vehicles which is expected to drive the rise in Auto Outstanding Loans in Indonesia
• Indonesia has a large population base, 60% of whom are under 30 years old, and a steady rate of population growth averaging 0.8% annually gives the market a strong long-term potential.
• Lastly, High-Mid range auto vehicle models are expected to witness strong success as the majority of automotive buyers segment includes the upper middle and high Income people leading to larger Loan amount per customer.